Correlation Between Osmosis and ITC

Can any of the company-specific risk be diversified away by investing in both Osmosis and ITC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Osmosis and ITC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Osmosis and ITC, you can compare the effects of market volatilities on Osmosis and ITC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Osmosis with a short position of ITC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osmosis and ITC.

Diversification Opportunities for Osmosis and ITC

0.0

Correlation Coefficient

Osmosis  ITC

Pay attention - limited upside

The 3 months correlation between Osmosis and ITC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Osmosis and ITC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITC and Osmosis is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Osmosis are associated (or correlated) with ITC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITC has no effect on the direction of Osmosis i.e., Osmosis and ITC go up and down completely randomly.

Pair Corralation between Osmosis and ITC

Assuming the 90 days trading horizon Osmosis is expected to generate 2.93 times more return on investment than ITC. However, Osmosis is 2.93 times more volatile than ITC. It trades about 0.05 of its potential returns per unit of risk. ITC is currently generating about 0.0 per unit of risk. If you would invest  63.00  in Osmosis on February 7, 2024 and sell it today you would earn a total of  25.00  from holding Osmosis or generate 39.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	38.04%
Values	Daily Returns

Osmosis  vs.  ITC

Osmosis

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Osmosis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for Osmosis shareholders.

ITC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ITC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Osmosis and ITC

The main advantage of trading using opposite Osmosis and ITC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osmosis position performs unexpectedly, ITC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ITC will offset losses from the drop in ITC's long position.

The idea behind Osmosis and ITC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.